Friday, March 5, 2021

Credit Score Information & Strategies

Credit will play a vital role in your ability to finance items such as homes, vehicles, qualifying for apartments, and much more. Therefore, it is important to keep a close eye on your credit habits to ensure that your score is high enough to get financing when needed. If you’re looking to secure a mortgage at Lake of the Ozarks, Team Lasson is ready to help, from the qualifying process to the final closing transaction. I’m here today to give you some information on your credit score and how to effectively manage it to ensure you can qualify to buy a home at Lake of the Ozarks. Read on to learn more!

How are Credit Scores Calculated

Your credit score is calculated by a mathematical algorithm that is linked to one of your three credit reports. Your FICO Score is a commonly used credit model used by mortgage companies, which typically range from 300 – 850. Many of the scoring models used consider your payment history on lines of credit, the length of the existing credit lines, the types of credit lines you have, and how often you apply for new credit.

How to Improve Your Credit Score

If your scores aren’t quite where you want them, there are a multitude of ways that you can improve them, such as:

Paying Bills On Time

Paying your bills on time is always a best practice for keeping your credit score on the rise. If you have to pick and choose a bill to pay, a good rule of thumb is to prioritize mortgages/rent, auto loans, student loans, phone bills, and utilities.

Paying Off Debt & Keeping a Low Balance

This item involves the credit utilization ratio – taking the amount of credit you’ve used at any given time and dividing it by your total credit limit. Keeping your utilization low tells lenders that you know how to effectively manage your credit lines and aren’t maxing them out.

Not Closing Unused Credit Cards

If they’re not costing you money, keeping unused credit lines open can benefit your credit utilization ratio. If you close unused accounts, it will impact this ratio by increasing your outstanding utilization.

Correcting Inaccuracies

When reviewing your credit reports from the three bureaus (TransUnion, Equifax, and Experian) always make note of any discrepancies that appear inaccurate. Incorrect information on these reports could be dragging your score down. Be sure to call the bureau and report any inaccuracies that you see on your reports. You may also have to contact the creditor directly to get them resolved.  DO NOT dispute the findings with the credit bureaus as this could be detrimental to obtaining a mortgage loan.

How to Establish A Credit Score

If you’re just starting out, it’s likely you may not have a credit score. This means that you have few (if any) credit accounts listed on your reports. People with fewer than 3 credit lines may have difficulties obtaining a score due to a lack of credit history/information. You can begin to establish a credit portfolio by; applying for a secured credit card, become an authorized user on someone else’s credit card, or taking a “credit builder loan.”

Rebuilding Your Credit Score

Time is your biggest ally when it comes to fixing bad credit. The length of time that it will take for your score to rebuild can vary depending on the type of negative change. Delinquencies, for example, remain on your credit report for 7 years. Items of public record stay on the reports for 7 years, although certain bankruptcies can remain for up to 10. Credit inquires will show on your report for two years. 

As always, your mortgage experts at Lake of the Ozarks, Team Lasson is always here to assist with your home financing needs. I will pull your credit during the loan qualification process and can give you accurate information about your scores, credit lines, issues, as well as advice on how to proceed. Your credit is going to play a large role in your ability to secure a mortgage at Lake of the Ozarks, and I’m here to provide you with exceptional loan services and techniques to ensure you can get your dream home. 

Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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